SQM's rating methodology incorporates a wide range of research elements that generally require up to approximately three months for completion. These elements include:

  • Detailed SQM Review Questionnaire, probing key areas including Business Profile, Investment Process and Performance, Fees, Key Staff, Governance and Risk
  • Comprehensive SQM Data Template covering a wide variety of key Fund positioning and portfolio criteria
  • Review of official documents such as PDS, Fund Constitution, FSC, statutory financial statements, and any other documents necessary to the rating process
  • In-depth meeting conducted with key people in the investment management team and relevant business-side executives (e.g. CEO, Head of Distribution)
  • Quantitative analysis conducted via the SQM Investment Dashboard, a proprietary web-based system developed internally to assess important Fund metrics

The assessment incorporates a combination of qualitative and quantitative research techniques to determine rating opinions on domestic and global products in the following categories: Alternatives, Fixed Income, Equities, Infrastructure, A-REITs, G-REITs, Direct Property, Mortgage Trusts, RMBS, ETFs, SMAs.

Information generated is passed through an assessment model at the completion of the research process. The model generates a product score, which correlates to a specific star rating up to a maximum of five stars. The star rating spectrum allows products to be ranked within quarter star increments.

Following are descriptions for each of the star ratings, developed as a guide for dealer group research teams and investment committees:

Outstanding: 4.5 stars & above

Highly suitable for inclusion on APLs. The fund most often outperforms its peers and benchmark. In all cases the fund is operating to its mandate and product disclosure statement (PDS). There are no corporate governance issues. Management is extremely experienced and skilled and has access to significant resources.

Superior: 4 to 4.25 stars

Suitable for inclusion on most APLs. The fund outperforms (or is likely to) its peers and benchmark the majority of the time. The fund most of the time has been operating within its mandate and PDS. There are very little to no corporate governance concerns. Management is of a very high calibre.

3.75 stars: Favourable

Consider for APL inclusion. The fund may outperform its peers and benchmark the majority of the time or SQM believes this is a fund that has potential to be an outperforming fund over the medium term. Management is of a quality calibre but may not yet be fully tested. There are no corporate governance concerns or they are of a minor nature.

Acceptable: 3.5

Consider for APL inclusion, subject to advice restrictions. There is some degree of additional risk attached to the fund by way of performance. The fund may periodically underperform its peers and benchmark or it has not been fully tested. There may be some additional concentration risk. Management is generally experienced and capable. There might be corporate governance issues of a mid-level or corners over the Responsible Entities/Parent Entities financial position/performance.

Caution Required: 3.25 stars

Not suitable for most APLs.Performance has been significantly under-benchmark and peers. There is a greater than average risk of underperformance over the medium term. There is a risk of the fund not operating to mandate or to its PDS. There are corporate governance concerns. Management has been operating in an average manner.

Strong Caution Required: 3 stars

Not suitable for most APLs. The fund is unlikely to perform to its mandate over the near term. There might be some greater than average corporate governance concerns. SQM has a number of concerns of management.

Avoid or Redeem: below 3 stars

Not suitable for APL inclusion.


The rating is no longer applicable. Significant issues have arisen since the last report was issued, and investors should avoid or redeem units in the fund.


The rating is currently suspended until SQM Research receives further information. A rating is typically put on hold for a period of 2 days to 4 weeks.

Not Rated

The fund has not been rated by SQM.